Annual contributions to the Deposit Guarantee Fund are based on the member banks’ share of covered deposits and their risk profile. Banks with a riskier business profile will have to pay relatively more in annual contributions.
Calculation of annual contributions
The methodology for calculating risk-based contributions to the Deposit Guarantee Fund follows guidelines issued by the European Banking Authority (EBA). The member banks' annual contributions are based on their share of total covered deposits and their risk profile. Financial key indicators are weighted together to an aggregated risk weight for each member bank. This risk weight will be used to adjust the annual contributions.
The following categories of financial key indicators are included in the risk adjustment:
- Capital coverage
- Liquidity and funding
- Asset quality
- Business model and management
- Potential losses for the deposit guarantee scheme
In the EBA guidelines, the widest interval for the aggregate risk weights is proposed to range from 50 to 200 percent. The guidelines allowance for a wider interval if needed to reflect differences in business models and risk profiles of member institutions. The proposed interval for Norwegian banks range from 50 to 300 percent. For example, for two member banks at each end of the risk scale and with the same amount of covered deposits, the risk-weighted contribution will be six times higher for the more risky bank.
Target level of annual contributions
The target level of the sum of annual contributions to the deposit guarantee fund is set at 0.08 percent of total covered deposits. The Ministry of Finance may determine if contributions in a given year should be lower than this.
Annual contributions may be set higher than 0.08 percent if the fund size falls below two thirds of the minimum requirement of 0.8 percent of total covered deposits. The member banks may also be subject to an extraordinary contribution of up to 0,5 percent if the fund is insufficient to repay depositors when deposits become unavailable.
Collection of contributions
The model for calculating contributions to the Deposit Guarantee Fund must be adopted by the Board of Directors in the Norwegian Banks' Guarantee Fund and sent to the Financial Supervisory Authority for approval.
Risk based annual contributions following the new law will be collected for the first time in 2019.